The latest chapter in the Trump administration's maximum pressure campaign against Iran was announced on May 8, on the one-year anniversary of the U.S. withdrawal from the nuclear agreement, or Joint Comprehensive Plan of Action (JCPOA). Through a new Executive Order, the administration imposed sanctions on Iran's iron, steel, aluminum, and copper sectors, which were described in a statement by the President as the Iranian government's "largest non-petroleum-related sources of export revenue."[1]

The sanctions take aim at any Iranian entity operating in these sectors, as well as foreign firms that buy, sell, or transport goods or provide services connected to the sectors, including financial institutions that knowingly facilitate related transactions. Such institutions run the risk of having any U.S. property blocked and being barred from opening or maintaining correspondent banking accounts in the United States. In addition, individuals determined to be supporting these newly-sanctioned sectors can be prohibited from entering the United States.[2]

On the same day, after what it termed twelve months of "considerable restraint," Iran announced that it would no longer abide by some nuclear restrictions in the JCPOA, including the 300 kilogram limit on its stockpile of low-enriched uranium gas and the 130 metric ton limit on heavy water reserves.[3] The production and stockpiling of these materials is being monitored by the International Atomic Energy Agency (IAEA). As of the IAEA's February 22 report, Iran had 124.8 metric tons of heavy water and 163.8 kg of low-enriched uranium.[4] Therefore, although the decision to suspend these restrictions appears to take immediate effect, Iran may not exceed JCPOA limits on stocks of these materials for some time – depending on their rate of production.

Iran's May 8 decision also starts a 60-day countdown clock. If the remaining parties to the JCPOA fail to compensate for the economic impact of U.S. sanctions – particularly those targeting the financial and energy sectors – Iran warns that it will no longer cap enrichment at lower levels and stop ongoing work with China on redesigning and rebuilding the Arak heavy water reactor. Additional JCPOA obligations would be suspended "step by step," according to a statement by the Supreme National Security Council.[5]

Combined, a larger stockpile of enriched uranium and an increase in the enrichment level of that stockpile would move Iran closer to being able to produce nuclear weapon fuel – a capability that the JCPOA had temporarily contained. The agreement extended from approximately two to twelve months the amount of time it would take Iran to "breakout" and make fuel for one nuclear weapon.

It is unclear how easily Iran could reverse the modifications made to the Arak reactor as part of the JCPOA, which included removing the core and filling it with concrete. If completed based on its past design, the reactor would provide Iran with weapon quantities of plutonium in its spent fuel. Last January, the head of the Atomic Energy Organization of Iran (AEOI), Ali Akbar Salehi, claimed that Iran had procured additional pipes to replace those filled with concrete as part of the nuclear agreement. These pipes would allow Iran to "quickly revert to the previous position," according to Salehi.[6]

Meanwhile, France, Germany, and the United Kingdom – European parties to the JCPOA – are caught between a U.S. sanctions strategy they do not support but cannot mitigate, their beleaguered commitment to an agreement considered a key nonproliferation achievement, and mounting Iranian frustration. Two EU statements released this week reflect this struggle. They criticize Iran's nuclear ultimatum and call for Iran to "refrain from any escalatory steps" that would compromise its implementation of its JCPOA commitments,[7] while promising to increase the budget of the INSTEX "special purpose vehicle." [8] This vehicle is meant to enable certain trade with Iran despite U.S. sanctions. However, INSTEX is not yet operational and is unlikely to provide anything to Iran beyond a sign of Europe's political commitment to the nuclear agreement.

The Trump administration's maximum pressure campaign has left little room for the resumption of any trade and investment with Iran. True to its word, the administration has been ratcheting up pressure over the past twelve months and steadily reducing waivers and authorizations that would allow countries and companies to pursue even limited economic activity. The sanctions announced this week follow a series of aggressive economic measures, which include:

• the decision on May 3 to end some of the waivers that permitted nuclear cooperation with Iran among the remaining parties to the JCPOA;[9]
• the decision, announced on April 22, not to reissue sanctions waivers allowing for the ongoing purchase of Iranian oil;[10]
• the designation by the U.S. State Department, effective April 15, of Iran's Islamic Revolutionary Guard Corps (IRGC) as a Foreign Terrorist Organization;[11]
• a $1.1 billion settlement agreement between U.S. government agencies and British bank Standard Chartered for facilitating access to the U.S. financial system on behalf of Iranian entities, in violation of sanctions;[12]
• the designation in March of some 30 individuals and organizations connected to Iran's Organization of Defensive Innovation and Research (SPND), which played a central role in Iran's past nuclear weapons effort;[13]
• the re-imposition last November of powerful sanctions aimed at Iran's banking, energy, and shipping sectors, including foreign entities doing business with these sectors, and the designation of an unprecedented 700 entities connected to these sectors;[14]
• and, last August, sanctions on trade with Iran in gold and precious metals and an end to authorizations allowing Iran to purchase commercial aircraft.[15]

In addition to mounting economic pressure, the United States this week announced that it is deploying the USS Abraham Lincoln Carrier Strike Group and B-52 bombs to the Persian Gulf. The move comes in response to "a number of troubling and escalatory indications and warnings" from Iran, according to National Security Advisor John Bolton.[16]

Amidst these actions, the United States continues to express an interest in reaching a comprehensive agreement with Iran – based on an expansive set of conditions described by Secretary of State Mike Pompeo in May 2018. In response to a question on May 9 about the rising risk of military confrontation, President Trump reiterated his desire to negotiate with Iran, saying "I'd like to see them call me" and "I look forward to the day where we can actually help Iran." This follows the President's statement a day earlier about "someday meeting with the leaders of Iran in order to work out an agreement and, very importantly, taking steps to give Iran the future it deserves."[17]

Iran's leaders, however, do not appear publicly interested in negotiating with the United States. In a statement on May 8, Iran's Supreme Leader Ali Khamenei said that any such negotiation is "banned" until Iran "reaches a favorable level of power and sovereignty that would nullify U.S.'s pressures and domineering efforts."[18]

What happens next depends very much on whether Iran decides to break its commitments under the JCPOA, as it has threatened to do. The dispute resolution process overseen by the agreement's Joint Commission appears incapable of resolving Iran's complaint related to re-imposition of U.S. sanctions. In this case, the agreement allows Iran to treat unresolved complaints as grounds "to cease performing its commitments under this JCPOA in whole or in part."[19]

After its 60-day deadline expires, Iran might decide to take any or all of the following actions: increase the number of first-generation IR-1 centrifuges operating, above the 5,060 allowed by the agreement; install and operate more powerful centrifuges in greater numbers; resume uranium enrichment at the underground Fordow facility; or curtail cooperation with IAEA inspectors. Taking one or more of these steps could prompt the JCPOA's Joint Commission to take up Iranian non-compliance and could eventually lead to the termination of the JCPOA and the "snapback" of all previous U.N. sanctions.

Or Iran could try to manage the economic crisis, adhere to the nuclear limits of the agreement "in part," hope that other JCPOA parties do not send Iran's non-compliance to the U.N. Security Council, and wait for a U.S. administration willing to resume its participation in the agreement. Such a choice might also allow Iran to reap the benefits of soon-to-be expiring U.N. restrictions. Under the JCPOA, by October 2020 the U.N. conventional arms embargo would be lifted and, three years later, the U.N. ban on missile technology imports and ballistic-missile related activity is set to expire.